Dollar extends slide after falling inflation data

  • Investors pile into riskier assets
  • Cryptocurrencies remain under pressure

NEW YORK, Nov 11 (Reuters) – The dollar fell broadly for the second day in a row on Friday as investors favored riskier currencies following colder-than-expected U.S. inflation data that bolstered arguments in favor of an easing of the Federal Reserve. sharp increases in interest rates.

Friday’s dollar weakness was an extension of a move sparked after Thursday’s data showed U.S. consumer inflation rose 7.7% year-on-year in October, its slowest rate since January. and lower than forecast by 8%.

The dollar’s long rally over the past two years has drawn a host of dollar bulls leading to crowded positioning and Thursday’s data left many looking for a quick exit, strategists said.

“It’s not just the short-term trend followers, the momentum players that need to get out of their positions, but some long-term structural dollar positions need to be unwound,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

The dollar was down 1.41% against the Japanese yen at 138.96 yen; while the euro advanced 1.09% against the greenback at $1.0322.

The dollar found little support in Friday’s survey data which showed U.S. consumer confidence fell in November, driven by lingering concerns about inflation and rising borrowing costs.

The risk-sensitive Australian and New Zealand dollars both rose more than 1% against the greenback.

Against a basket of currencies, the dollar was down around 3% over two sessions, on pace with its biggest two-day percentage loss since March 2009. The index is up around 19% for the year.

“Yes, more people have become convinced that the dollar has peaked, but the move has been so sharp that I advise people against chasing it,” Bannockburn’s Chandler said.

Investors’ risk appetite received an additional boost from China’s health authorities, who eased some of the country’s strict COVID-19 restrictions, including shortening quarantine times for close contacts. cases and incoming travellers.

The futures market shows that investors are pricing in a 71.5% chance of a 50 basis point US rate hike next month, up from around 50/50 a week ago.

The pound, meanwhile, rose 0.58% against the dollar to $1.17785 after UK data showed the economy did not contract as much as expected in the three months since. ending in September, although it is still entering what is expected to be a long recession.

The dollar was down 1.8% against the Swiss franc at 0.94655 francs after Swiss National Bank President Thomas Jordan said on Friday that the bank was ready to take “all necessary measures” to bring inflation back to its target range of 0-2%.

Cryptocurrencies remained under pressure given the ongoing turmoil in the crypto world following the fall of FTX exchange. FTX’s native token, FTT, was last down 20.8% at $2.952, taking its month-to-date losses to almost 90%.

Bitcoin fell 4.1% to $16,836.

Reporting by Saqib Iqbal Ahmed; Editing by Richard Chang

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